Virgin Orbit shuts down operations due to funding woes

In a filing made on Thursday, Virgin Orbit announced that it would be laying off 675 employees, which amounts to roughly 85% of its workforce. The company made this decision after it was unable to secure additional funding. 

A spokesperson for the company confirmed that operations have been halted for an indefinite period of time, as reported earlier by CNBC. The remaining 15% of employees will be tasked with winding down the business, according to the spokesperson.

Virgin Orbit’s recent decision to cease operations is a result of a rapid decline in its business, which was punctuated by a high-profile launch failure in January and a sharp drop in its stock price.

The company had temporarily suspended operations earlier this month while it looked for additional capital. Virgin Orbit is part of the larger business empire owned by Richard Branson, which includes Virgin Atlantic and Virgin Galactic Holdings.

Despite being a public company, Virgin Orbit has not yet been profitable.

Virgin Orbit’s shares have experienced a sharp decline, with a 45% drop in extended New York trading as of 7:20 p.m. The shares were trading at just 19 cents each, in stark contrast to their value of over $7 a year ago.

The Long Beach, California-based company is one of several space-related startups with once high-flying valuations that have seen their shares plunge as investors shy away from untested business models and money-losing operations.

Astra Space Inc. reported Thursday that it’s cash and cash-equivalent reserves fell by 32% in the quarter that ended Dec. 31, and Rocket Lab USA said last month it expects to its quarterly loss to be three times bigger than analysts had estimated.

According to an anonymous source, Virgin Orbit is currently exploring options to sell all or part of its business. 

However, discussions about a possible transaction do not include Matthew Brown, a venture capital investor from Texas who had expressed interest in a deal earlier this month. Brown had presented himself as a potential saviour for Virgin Orbit, which was worth billions of dollars just a year ago. However, his financing deal fell apart over the weekend, as reported by CNBC on March 27th.

Virgin Orbit was initially founded in 2017 as a subsidiary of Virgin Galactic, with a focus on launching small satellites into orbit. In 2021, the company went public by merging with a blank-check firm. Virgin Orbit’s core business was centered around launching small satellites, which is different from Virgin Galactic’s focus on sending humans to the edge of space and back.

Virgin Orbit distinguishes itself from some of its competitors by using an air launch method to deploy its LauncherOne rocket at a high altitude from underneath the wing of a modified Boeing Co. 747 aircraft. The company began developing the rocket during its earlier years at Virgin Galactic, before the formal creation of its satellite-launch business.

Virgin Orbit successfully launched its first mission to orbit in January 2021, marking a major milestone for the company. It went on to complete four additional successful flights through 2022.

Virgin Orbit had previously planned to increase its launch frequency in 2021, but those plans were put on hold after the failure of its January mission. The launch was intended to be the first orbital launch from British soil, but it ultimately failed. 

The LauncherOne rocket experienced a problem with a fuel filter during the flight and was unable to reach orbit, resulting in the loss of nine small satellites. As a result of the failed launch, the company had to reassess its plans and temporarily suspend operations while it sought additional funding.